Trader Talk

Contagion at the Core as Global Growth Slows

European and global markets are down roughly 1 percent across the board. The euro is at a seven-week low.

While German Chancellor Angela Merkel said that it would be "extraordinarily inappropriate" for the European Central Bank to issue eurobonds, and that "the mandate of the European Central Bank cannot, absolutely cannot, be changed," she and the other Germans may start to change that opinion after seeing the German bund auction this morning.

Contagion at the core. A poor auction of German bunds — some are calling it an outright failure, since the bid to cover ratio was below 1 if the Bundesbank bids are excluded — seems to have shocked traders in Europe. The average yield was 1.98 percent.

As expected, the European Commission issued a study today saying that eurobonds would be one way to stabilize the European debt markets.

European Finance Ministers are meeting Nov. 29-30, and should finalize what form of leveraging (if any) the European Financial Stability Facility will take.

EU leaders will meet Dec. 9.

Slower global growth. China's HSBC flash PMI for November shrank to 48 from 51 (showing contraction), the weakest since March 2009, while euro zone manufacturing PMI fell to 46.4 in November from 47.1 in the prior month, lowest since July 2009.

European banks need more money. The Belgians are struggling to figure out how much they are going to have to pay for Dexia. German bank Commerzbank — effectively owned by the German government — was down big yesterday on speculation they would need more capital than expected. ?


1. S&P 500 opened lower — its 6th straight loss and the longest such streak since early August.

2. Deere rises 6 percent after handily beating fourth-quarter estimates ($1.62 a share vs. $1.43 a share consensus) on a stronger-than-expected 20 percent rise in sales. The agricultural equipment manufacturer saw strong equipment sales, led by a 31 percent jump outside the U.S. and Canada.

That trend is expected to continue this year, with "substantial growth ahead" and a forecast of a 15 percent rise in worldwide equipment sales. But don’t expect much contribution to growth from Europe. Sales in both its European agriculture and construction divisions are expected to be flat next year due to the continued economic uncertainty in that region.

3. McCormick spices up its dividend by 11 percent. The spice and seasoning provider raised its quarterly dividend to 31 cents a share, up from 28 cents a share.

Bookmark CNBC Data Pages:


Want updates whenever a Trader Talk blog is filed? Follow me on Twitter:

Questions?  Comments?